Question

Write and explain accounting policies used in preparation of financial statement for any Ghanaian organization

Answer 1

accounting policies used in preparation of financial statement for any Ghanaian organization

Accounting policies are very important for the proper understanding of the information provided in the financial statements. An entity should clearly state the accounting policies it has used while preparing the financial statements. Disclosure of accounting policies is important because many accounting standards allow alternative treatments for a same transaction or item. Users of financial statements will not be able to compare the financial information with other entities if the accounting policies are not cleared outlined.

The presentation and preparation of financial statements should be performed in accordance with the Sections 25-31 of the Companies Act. Financial statements must include:

•     Statement of Financial Position
•     Statement of Profit or Loss and Other Comprehensive Income
•     Statement of Distribution
•     Statement of Cash Flows
•     Statement of Changes in Shareholder’s Funds
•     Notes to Financial Statements